Brazil stocks fall, real seesaws ahead of key data

SAO PAULO, July 13 (Reuters) - Brazilian equities declined on Monday as investors awaited key data later in the week that could clarify the outlook for economic recovery around the world.

The benchmark Bovespa index .BVSP fell 1.53 percent to 48,469.87 on a day with no major economic indicators planned for release.

However, data on Brazil retail sales and growth in China are due later in the week, important indicators for Brazil's economy. Chinese growth is widely considered a possible engine for reinvigorating the ailing global economy.

Brazil's currency, the real (BRBY), seesawed, edging up 0.10 percent against the U.S. dollar to 2 reais to the dollar. The real had slipped 0.55 percent last Friday.

The Bovespa index dropped almost every session since July 2 as investors have grown cautious about a quick recovery to the global economic crisis. "In the past two weeks our global growth surprise index has remained practically unchanged, with up- and downside surprises offsetting one another," UBS economists Andrew Cates and Larry Hatheway wrote in a note to clients.

Yet there's still room for cautious optimism, said Kathy Lien of GFT Forex in a report. "However, despite the skepticism about the outlook for the U.S. economy, there is no question that things are improving," she wrote.

Steelmakers' shares fell on Monday, with Usiminas (USIM5.SA) dropping 5.45 percent to 35.54 reais and Gerdau (GGBR4.SA) down 2.89 percent to 18.49 reais.

State-controlled energy giant Petrobras (PETR4.SA) also declined, shedding 1.79 percent to 29.15 reais, in line with the 2.05 percent drop in oil CLc1.

Vale (VALE5.SA), the world's largest iron ore producer, slid 1.07 percent to 27.75 reais. Price negotiations between China and global iron ore producers have dragged on past the June 30 deadline, with conflicting media reports about possible deals. [ID:nSP473911]

Petrobras and Vale have the biggest weighting in the Bovespa index.

YIELDS

Yields on Brazilian interest rate futures contracts <0#DIJ:> rose slightly, reflecting sentiment that Brazil's central bank may be nearing the end of a spree of reductions in the benchmark interest rate, the Selic. In June, policymakers sliced the rate to a record-low 9.25 percent, the fourth reduction this year.

The yield for the contract due Jan. 2011 DIJF1, among the most highly-traded of the morning, rose to 9.77 percent from 9.74 percent.

While policy makers have hinted at room for more cuts they have also stressed future reductions would be made "more parsimoniously." (Reporting by Luciana F. Lopez; Editing by Padraic Cassidy)